Burma Business Roundup (Saturday, Jan. 26)

By William Boot 26 January 2013

Tens of thousands of poor Burmese may soon start to qualify for loans from an international banking scheme to help small business activities.

Up to 200,000 people, mostly women, who cannot obtain loans from regular domestic banks will qualify for the scheme, the International Finance Corporation (IFC) announced.

The IFC, an arm of the World Bank which deals with private enterprise, said it is teaming up with banks in Germany and France to establish a micro-financing agency in Burma.

“Our investment in a microfinance institution is a good start to our support for Myanmar’s economic reforms in order to improve access to finance, create more jobs and reduce poverty for its people,” said the IFC’s director for East Asia and the Pacific Sergio Pimenta on Jan. 23.

The objective of the scheme will be to “increase access to financial services for both the urban and rural poor. This will help convince other players that affordable microfinance services can be delivered effectively in [Burma].”

The IFC is contributing US $2 million to the agency which it hopes to begin operating this year although no timetable was announced, other than setting a target of helping 200,000 people by 2020.

It will be the first investment ever made in Burma by the IFC, which opened an office in Rangoon last August.

Thailand Plans Special Business Zone at Mae Sot on Burma Border

The Thai government has approved plans to develop a special economic zone around Mae Sot, the border town which has long been Thailand’s biggest land-trading point with Burma.

The zone will feature at least one large industrial estate and the town is to be linked with the rest of Thailand with a new railway, airport and a four-lane highway.

Thailand’s National Economic and Social Development Board (NESDB) drew up plans for the special zone to “support the formation of the Asean Economic Community in 2015 and to develop the country’s East-West Economic Corridor,” The Bangkok Post reported on Jan. 23.

Thailand’s Prime Minister Yingluck Shinawatra will chair a special economic zone policy committee to implement the project, government spokesman Tossaporn Serirak said.

Yingluck has previously announced that she was taking personal charge of pushing development of the special economic zone proposed for the southeast Burmese coastal town of Dawei, but an absence of investment funding from private enterprise has prevented any progress there so far.

Mae Sot’s border trade value was worth 30 billion Thai baht (US$1 billion) in 2012, according to the Bangkok Post as Burmese reforms allowed freer trans-border traffic. Border trade at Mae Sot has been repeatedly stymied in the past by border military tensions between the two countries.

During 2012 there were proposals by Thai business groups to develop industrial estates on the Burmese side of the border in a bid to keep factory costs down after the Thai government approved a 300 baht (US $10) daily minimum wage. Mae Sot has a large number of Burmese workers, many of whom work for less because they are illegal migrants.

China Admits It Colluded with Burma Military by Paying Bribes

An official Chinese state newspaper has openly admitted that Chinese firms seeking to do business in Burma colluded in corrupt practices with the former Burmese military regime.

“The ordinary Myanmar people are disgusted with the corruption of the former military regime. Chinese companies had to pay large ‘commissions’ to government officials when they invested in Myanmar in the past, which also impaired the image of Chinese companies,” The Global Times reported on Jan. 23.

The admission was made in an article comparing recent Japanese and Chinese investment in Burma.

The paper, part of the official government news agency Xinhua, said Japan was investing in Burma because it wanted to counter balance Chinese influence in the reforming Southeast Asian country.

“Besides [Burma’s] strategic location, Japan’s economic and diplomatic drive in the country has another reason: China,” said The Global Times’ report.

It noted that several Chinese-funded projects in Burma have been “abruptly halted or suspended since 2011, including the Myitsone dam project and the Letpadaung copper mine project.”

“China should try to improve its image among ordinary people in [Burma] to avoid losing more ground in the rivalry with Japan,” the paper reported.

Indian Firm Plans Factory in Burma to Beat 2014 Timber Export Ban

A major wood processing company in India said it will apply for approval to open a factory in Burma to beat a ban on timber exports due to begin in 2014.

Greenply Industries Limited sources one-third of the raw wood its uses to make household polished veneer and plywood surfaces from Burma, Malaysia and Indonesia.

“[Burma] has been discouraging exports of wood and they are likely to ban it starting 2014. If this happens then our raw material sourcing will get affected,” said Greenply’s finance chief Venkatramani (one name only), quoted by The Hindu newspaper. “So we are setting up this plant to secure our raw material availability.”

A Burma factory would process raw wood into value-added products which could be exported to India, he said. Greenply will submit factory plans to the Myanmar Investment Commission by the end of February.

The Burmese government said last November it plans to completely ban the export of timber in 2014 to both protect remaining forests and to develop a sustainable hard wood export market. Burma is currently one of the world’s biggest exporters of teak wood.

Soviet-Style Animal Farms Planned for Burma?

Belarus in Eastern Europe is in discussion with the Burmese government to establish joint agricultural developments in Burma, the Belarusian news agency BTA reported.

Proposals include setting up large-scale chicken and pig farms to provide meat for domestic and foreign markets, BTA said quoting the Belarusian Agriculture and Food Ministry. Belarus is also noted for forestry management.

The former satellite of the Soviet Union is one of the last places in Europe still operating a soviet-style economy with most businesses state owned.

Belarus supplied weapons, including MiG fighter planes, to the former Burmese military regime.